BIRMINGHAM, Ala. (WBRC) - Reality is grim for some people right now. They don’t know when the next paycheck will come. Rent and mortgages are due on April 1. And that’s only the first of a series of April bills—for utilities, credit cards, car payments, insurance, mortgages and student loans—that many American households won’t be able to meet.
So, if you’re one of the millions unemployed, what can you do? We asked Money Expert Stewart Welch of The Welch Group for help.
Q: What can you do if you know you are not going to be able to pay all your bills?
A: Many vendors are working with their customers during this unprecedented crisis. For example, many utility companies will provide some form of forbearance. Call the companies you owe money and see how they are willing to assist you.
If you are an individual who has lost their job, then he or she can file for unemployment insurance.
Visit the Alabama Department of Labor website to learn more about if you are eligible for the below benefits related to COVID-19.
Employees will be entitled to the amount covered under their state’s unemployment law, plus an additional $600 per week for up to 4 months in Federal Pandemic Unemployment Compensation. In total, an individual will be eligible for 26 weeks for state and additional 13-week extension totaling 39 weeks.
Individuals are also eligible for extended sick leave related to COVID-19, so consult with your employer on these additional options. If you are an employer who (has been affected by COVID-19) is required to shut down due to COVID-19 reasons, below are the following options:
- The CARES Act can assist through the SBA 7(a) Small Business Interruption Loan Program
- Loans are 100% guaranteed by the federal government
- If you have less than 500 employees, you can apply for an SBA loan to help cover costs that is eligible for loan forgiveness
- Refundable payroll tax credits fully offset the cost of paid sick leave to the employer claimed on the quarterly payroll tax return
Q: Will credit cards defer payments like mortgage companies and student loans?
A: Many credit card issuers are assisting their customers by providing them with information and resources that may alleviate some of their financial burden. Consult with your credit card company or their website for further information.
Credit Karma has a good resource to summarize the credit card companies resources.
Q: What if I have private loans for education?
A: Unfortunately, the CARES Act does not offer relief for private student loans. Contact your student loan lender to inquire about potential payment options. Many lenders have similar forbearance options as the federal government. You can also consider refinancing your loan since interest rates are so low at this current time.
Q: Will late payments be reflected on credit reports?
A: Many credit card issuers have agreed to work with individuals on a case by case basis to waive late fees or consider requests to defer payments. It is worth asking for a one-time waiver. However, even if your credit card issuer agrees to waive the late fee, interest charges, or defer payments, they could still report a late payment to the credit bureaus. When you talk to your credit card provider, you should ask if they intend to do so.
Q: Which bills should I pay first with a stimulus check? How do you prioritize?
A: This crisis is a good time to assess where you are financially. We suggest making a list of all expenses and a list of all income or savings you use to pay these bills. Here are some tips:
- Use the stimulus check for necessities such as shelter, food, medical care, etc.
- Try and limit any unnecessary spending
- Many utility companies are giving extensions or waiving late payments, so make sure to get in touch with them and consider your options. These extensions could greatly help cut down on your bills.
- Start a new budget considering the unique issues at hand and stick to it
- Find any opportunity to bring in extra income
Finally, Stewart says to use the experience of COVID-19 to lay the groundwork for better financial planning in the future, starting with a robust emergency reserve fund.
“Some experts believe this won’t be the last time we experience a virus of this complexity,” he explained.